China plans $210m Waikato milk plant

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The Waikato town of Pokeno will be home to the first Chinese milk processing plant in New Zealand if a Chinese company is given the green light to buy land for its planned $210 million infant formula operation - creating 100 new local jobs.

Yashili International is one of China's biggest infant baby formula and soymilk powder makers, and has a conditional agreement to buy land in Pokeno's Gateway business park at the northern end of the Waikato expressway, to the west of McDonald Rd.

The New Zealander fronting negotiations for the Chinese, experienced dairy infrastructure specialist Terry Norwood, said if approved, the plant would provide local jobs for 100 people. Commissioning of the plant is planned for the second half of next year.

Yashili has formed a New Zealand registered company for the deal, Yashili New Zealand Dairy.

The plant, which would produce up to 52,000 tonnes of finished and semi-finished milk product a year, would buy its milk from a successful tenderer, which could be Fonterra or other parties, Mr Norwood said.

Yashili did not plan to have its own farmer suppliers.

Mr Norwood would only say Yashili's application had been made to the Overseas Investment Office "before Christmas".

A Chinese company, Shanghai Pengxin, had a two-year journey through the OIO with legal and political challenges before it got the all-clear to buy the Crafar farm estate, 16 North Island dairy farms that went into receivership in 2009.

Waikato District Council said it expects to receive an application later this month for the necessary resource consents to build the plant.

Regulatory general manager Nath Pritchard said once the application came in, one of the council's first steps would be to meet the applicants.

Mr Norwood said Yashili's interest in New Zealand would be wholly concentrated on manufacturing.

He said the company had focused on the Waikato for its New Zealand debut because "it represents the best New Zealand has in dairying".

"It is the embodiment of the New Zealand image for quality dairy product, and Pokeno is a convenient transport location for the ports of Auckland and Tauranga."

Yashili wanted the project to be seen internationally as a working model for future successful investment in New Zealand's dairy industry, Mr Norwood said.

The proposed plant would be built on part of a 80-hectare industrial park being developed by a New Zealand consortium in western Pokeno. Earthworks are under way for the industrial park.

Yashili is a 30-year-old company based in Chaozhou, Guangdong province, and has plants in Guangdong, Shanxi and Heilongjiang.

Its products are sold under the Yashili, Scient and Merla brands in 105,000 retail outlets in China.

The company has imported milk powder from New Zealand for more than 10 years and has used Kiwi milk powder exclusively in its infant formula since August 2010, Mr Norwood said.

Its move into New Zealand was encouraged by the Chinese government's decision to substantially reduce import tariffs on finished milk formula.

The tariff easing had been in response to China's rapidly growing demand for infant milk formula, Mr Norwood said.

China's need for safe milk for infant formula processing spiked in 2008 with the melamine poisoning scandal which saw Chinese suppliers of raw milk to Chinese dairy companies, including SanLu in which New Zealand's Fonterra had a shareholding, add the industrial chemical to milk to artificially raise protein levels and their earnings.

At least six babies died and thousands more have kidney problems as a result of drinking the laced milk.

NEW JOBS A 'WELCOME BOOST'

News of a potential hundred-job injection into Pokeno has community members beaming.

Waikato District Mayor Allan Sanson was ecstatic that Yashili International had selected Pokeno as a location for their planned baby formula operation after several months searching nationwide.

Although the deal has not been signed off by the Overseas Investment Office, and has consequently been kept under wraps, good news travels fast through the tight-knit community.

Pokeno Gasoline Alley petrol station owner Karen McIntosh, who has lived in Pokeno for many years, said she welcomed any opportunity to boost employment in the area.

"I'm all for it . . . If it brings in employment then I've got no problem at all," she said. "It just keeps the place alive."

Pokeno Motel manager Cheryl Sparrow said from what she has heard, those in the know seemed to be reacting positively to the news.

"I've not heard one person be against it yet," she said. "We're the newer business in Pokeno so we're all for growth, especially if there are jobs being created."

Mr Sanson said the potential plant was part of a "10-year structure plan" for the Pokeno Area, a plan the Waikato District Council inherited with Pokeno from the Franklin District Council.

He said the plan involved the development of up to 2300 houses along with 97 hectares of industrial land - the area where the Yashili plant is "earmarked" to go.

"There are others as well looking to locate into the Pokeno area and I think it will have a snowball effect.

"I think it will pull up rather quick and it will become a major employment node within the north of the Waikato."

Along with the growth in housing and employment, there could be a 7000 person population jump, and Mr Sanson said affordability will be a driver for many people looking to shift into the Pokeno.

"It's far cheaper to buy a brick and tile home on a 600 square-metre section at Pokeno than it is 10 minutes over the hill on the Auckland side of the boundary," he said.

He also said the baby formula operation was a welcome boost into the Pokeno community, with benefits reaching the wider Waikato area.

"I think [the community] will welcome it.

"It's a clean industry, it'll offer enormous employment opportunities for the people of Pokeno and surrounding areas being Tuakau, and probably even as far as people from Huntly right through to Te Kauwhata," Mr Sanson said.